Forex
The strongest to the weakest of the major currencies

As the North American session begins, the CHF is the strongest and the AUD is the weakest. In the US, the Federal Reserve raised rates by the expected 75 basis points yesterday. Chair Powell gave some leeway of 50 -75 basis points at the next meeting but the dot plot sees a string of 75-50-25 and 25 over the next 4 meetings into the end of the year. That would take the Fed Funds target to 3.4% comfortably above the neutral rate of 2-2.5%.

The stock market cheered the move and the flexibility, yesterday but it is "fast break the other way" today, as the SNB surprisingly raised rates by 50 basis points (rates are still -0.25%), and the BOE hiked for the 5th time by 25 basis points taking the rate to 1.25%, and traders are now focused on the "what if". That is "what if" the great launch, does not work? What if inflation, because it is Russian/Covid/Central Bank/Fiscal policy induced does not stop? What if the economies start to see sharp employment reductions and the ensuing recession(s) are deeper, and longer?

Stocks have reversed the gains from yesterday (and more in some of the indices). The Nasdaq index which looked like it might have successfully bounced near the 200 week MA, is back down near that MA level.

Yields are sharply higher. German 10 year is up 18.5 basis points. The US 10 year are up, but coming back down in the first minutes of trading in the NY session. They are currently up about 5.7 basis points.

A look around the markets shows:

  • Spot gold is down $8.70 or -0.47% at $1823.43
  • Spot silver is down $0.20 or -0.94% at $21.41
  • WTI crude oil futures are trading down $1.85 at $113.47
  • The price bitcoin is trading at $21,059. That's down around -$700 on the day

In the premarket for US stocks, the major indices are trading lower across the board

  • Dow industrial average is down -470 points after yesterdays 303.7 point rise
  • S&P index is down -70 points after yesterdays 54.53 point rise
  • NASDAQ index is down to -256 points after yesterdays 270.81 point rise

In the European equity markets, the major indices are lower

  • German DAX, -354.42 points or -2.65%
  • France's CAC -117 points -1.96%
  • UK's FTSE 100 -181 points or -2.5%
  • Spain's Ibex -98 points -1.2%
  • Italy's FTSE MIB -600 points or -2.69%

In the US debt market, yields are higher but off the highest levels

US rates
US rates are higher but off the highest levels

In the European debt market, yields are also higher with the flow funds heading out of the German, France, UK bonds today and money into the riskier Italy as the ECB plans to create a new tool to address fragmentation of the respective rates.

European rates
European rates are higher